Considered one of the more traditional industries, the legal sector has managed to remain mostly unaffected by digital transformation. However, the tide seems to be turning and digital disruption is sweeping through the remaining barriers to change, with new and developing technologies such as AI and machine learning transforming the day-to-day practice of law and the delivery of legal services.
The initial seeds for change were sown during the financial crisis. The global recession that followed saw the bottom line of many major companies hit hard, meaning they were reluctant to pay the high fees demanded by top law firms. As a result, companies began to develop their own in-house legal teams, using external lawyers for specific cases when they had exhausted the capabilities or capacity of their own legal teams. Naturally this removed a sizable amount of revenue opportunities away from the legal sector.
At the same time the Legal Services Act was introduced in the UK, which sought to liberalize and regulate the market for legal services in the UK to encourage more competition. There was a sense that the lack of competition was driving the cost of legal services up. Decreased regulation around who could operate a law firm and provide legal services meant that there was an influx of new players with a start-up mentality entering the market.
In a not dissimilar fashion to the fintech disruption we saw recently in the financial sector, where traditional banks were being disrupted by new players that drove the sector towards the current digital payment revolution, law firms had to adapt to the disruption caused by new and agile players. As a direct result, traditional law firms had to start investing in technology to keep up with the competition and deliver the best value for their clients.
The increased adoption of digital ways of working has paved the way for transformative technologies such as artificial intelligence (AI) and machine learning to gradually make their way into the legal sector. The practice of law and the delivery of legal services are being redefined, as technology and automation offer new and improved capabilities. Data-based insights are replacing traditional ways of reviewing matters, as AI-powered software significantly improves both the efficiency and speed of document analysis. AI’s aptitude at processing and analysing data also allows firms to improve accuracy, giving unprecedented insight into the potential legal outcomes, which in turn can help set a better strategy for the client.
Despite these great leaps forwards, the legal sector is still catching up in other areas. Law firms have been slow to embrace the public cloud, due to a perfect storm of government legislation, regional legislation, client resistance and perceived risks around security. A major challenge for enterprises is to determine the applicable law they need to abide by, as the geographical location of where data is stored in the cloud can be blurred – it may be frequently transferred from one location to another or may reside in multiple locations at the same time. Within the EU, the physical location is a decisive factor in determining which privacy rules apply, whereas in different jurisdictions other regulations may apply. This naturally poses challenges for law firms and companies with a global footprint.
In addition to this, there is still a debate raging around the security of the cloud, thanks in part to several high-profile security breaches. As such, some companies are still apprehensive about allowing their legal partners to store their data in the cloud.
The legal sector has gradually started to overcome these challenges and is steadily becoming cloud ready, but this has not come without cost. To help navigate the complex digital landscape, we have seen a growing number of law firms create new positions such as ‘Head of Innovation’. These roles are concerned with understanding how technology can more directly help a firm achieve its strategic objectives, improve services more proactively and evolve business models.
Navigating the disruption
London-based global law firm Holman Fenwick Willan (HFW) has partnered with Equinix to gain a competitive business advantage through developing a digital edge strategy in its key markets, including Dubai, London, Hong Kong, Melbourne and Paris. As one of the first UK law firms to expand internationally, HFW now generates over 60% of its revenue outside of the UK and has seen its international revenue triple in the last 7 years alone. As such, the firm was looking to standardize their IT infrastructure worldwide and required a global data center platform to meet not only the business demands of today, but also the needs of the Interconnected business of the future.
As part of their strategy for digital transformation, the 136-year-old law firm needed to distribute their IT infrastructure so that they could be closer to their customers and employees. By leveraging a digital edge strategy on Platform Equinix ™, HFW were not only afforded the scale and reach needed to thrive in a continually evolving digital landscape, they were also able to deploy Equinix Performance Hubs in the selected geographic markets. Equinix Performance Hub implementations leverage WAN optimization and peering technologies to eliminate inefficient, costly WAN routes, network choke points and variable QoE. This solution also provides an easy on-ramp access to major cloud service providers such as AWS, Google Cloud Platform, Microsoft Azure via Equinix Cloud Exchange Fabric™, ensuring that HFW is cloud-ready whenever the regulation, the clients and the legal sector allows.
This is business-critical for HFW, given the large file sizes and compliance requirements legal firms encounter. Furthermore, the direct and secure connections HFW leverage on Platform Equinix™ bypass the public internet, significantly decreasing the risk of cyber-attacks and data breaches – an important factor when dealing with highly sensitive data.
The firms that are tied to legacy IT infrastructures won’t be able to leverage the technologies that are transforming the legal sector. By rearchitecting for an Interconnection-first approach, enterprises gain a business-critical advantage as they are freely able to scale up to handle increased data traffic, whilst also being afforded the ability to connect to NSP’s around the world. This is particularly pertinent with legal practices that operate on a global scale, whose clients demand round-the-clock service, and firms that are looking to incorporate cloud into their IT model. Having the right digital infrastructure also enables companies to stay relevant in an era when new players are challenging preconceived notions of how legal firms should operate and paves the way for the seamless integration of further innovations and technologies.
See how legal services firms can transform their business in an increasingly competitive environment with our Digital Edge Playbook.